Observations on politics, news, culture and humor

The $20 billion question

Everyone’s atwitter over the $2o billion that BP is putting in escrow to cover economic liability payouts. Tons of fun after the jump.

First, there was Rep. Joe Barton R-TX more or less apologizing to BP for the “$2o billion shakedown.” The Corner covers it here. House Minority Leader John Boehner R-OH reacts to Barton here [Hat tip: Andrew Sullivan]. Joe Barton is one of the more reptilian members of Congress. 538 documented the heavy donations he has received from Big Oil. Matt Taibbi also had plenty to say about his shamelessly corrupt corporate advocacy in his book The Great Derangement.

Then Andrew Sullivan wrote about how Obama’s approach to the spill and the payout and a few other events characterize his manner as a president. Andrew is one of my favorite bloggers, but I don’t think this was his best writing. He seems to be a bit too wedded to the grown-up, conservative narrative he tried to write onto Obama during the campaign, and it feels like he’s trying harder than ever to somehow work Obama’s handling of the spill into it.

This paragraph, especially, left me scratching my head:

My own provisional judgment is the same on the economy, where Obama’s actions helped prevent what could have been a Second Great Depression. Historians will fight over this, but it seems pretty clear to me right now that Obama picked most of the least worst options and is prepared, unlike the GOP, to speak honestly about the deficit in the next two years. In the bank bailouts (much more successful than we first thought), the stimulus (still working), the health insurance reform (a real start on a deep and vexing problem across the developed world), and even the swarm of issues around Gitmo (torture has ended, while necessary, lawful military detentions and renditions continue), you see the same pattern of emotionally unsatisfying but structurally deep changes in the orientation of the ship of state. This is very gradual change we can believe in.

Speak honestly about the deficit, hmm…like how he says a healthcare bill deliberately written to exclude the expensive doc fix and deceptively costed out over a ten-year period in which only six of the years will actually see payouts will help close it? The stimulus…the one that keeps growing and growing every few months, the one that is now supposed to include a $50 billion bailout for state and local governments that happen to be clients of the Democratic Party? And Gitmo…do you really want to go there, Andrew? It’s still open. The trials have barely just begun. They’re trying to create a new Gitmo at Bagram AFB.

I know Andrew really wants Obama to succeed and thinks he’s a world better than conventional American leftists, but the more we learn about Obama the president, the less he seems to resemble Obama the candidate.

On Wednesday, Obama forced BP to set up a $20 billion fund to compensate everyone who suffers economic harm from the spill. But it’s a pernicious solution to a fictitious problem.

The idea is that if BP doesn’t conserve its cash, it will run out later and leave injured claimants high and dry. Not likely. Estimates of the total costs of the spill range up to $70 billion, which sounds large only if you are not a multinational petroleum company.

The oil giant had profits last year of nearly $17 billion, reports MSNBC, and its untapped reserves are worth $1.35 trillion. The quarterly dividend is just $2.6 billion. And BP won’t have to bear the whole burden, since its partners on the Deepwater Horizon rig, Transocean and Halliburton, will probably be on the hook for a large portion of the damages.

About the only thing that could keep BP from paying its share is a criminal conviction, which would wreck its ability to do business. So the administration purports to worry about BP’s bankruptcy while entertaining actions that would probably lead to bankruptcy.

Even if the escrow fund were justified, turning it over to the administration isn’t. Instead of trying to limit payouts to the truly deserving, the people in charge would have every incentive to err on the side of generosity to anyone who claims to have been hurt.

My take on it all? I want BP to pay for the damage it has caused. The American taxpayer didn’t cause the spill, so the American taxpayer shouldn’t have to pay for the spill. But I would have rather had BP turn the money over to an arbitrator or something. Turning the money over to the administration seems like it could lead to all sorts of demagoguery and favoritism. I also don’t know that I like the idea of BP even making this lump sum payment. What are the chances they are doing it just to get the critics off their tail? What are the chances that they end up being liable for a lot more, but it proves harder to get the rest of it out of them? And as far as Obama goes, I don’t really have a whole lot to say. I think he has been a little bit too pro-BP, especially with the spill estimates, and I think his speech this week was lame in a very traditional Washington way, but I do think he’s shown a good bit of restraint. I’m glad he hasn’t gone all type-A and assumed ownership of a problem that isn’t really his and I’m glad that with the exception of the “ass to kick” comments, he hasn’t really resorted to bad rhetoric.

2 Responses

I think it’s safe to say that they will blow a good chunk of the 20 billion on offices and salaries of the parasites who will be in charge of doling out the leftovers to the individuals who actually suffered damages from the leak.